Why the airlines just have to give me more money

MIKE Hodgkinson thinks he may have found the secret of success in business - just charge the customer more. The chief executive of BAA, the world's largest airports operator, boasts that when he was part of a team that saved Jaguar and Land Rover, he did so by bumping up prices.

Now he is locked in a dispute with the airlines operating from BAA's seven airports - including Heathrow, Gatwick and Stansted - over landing charges. Hodgkinson wants the likes of British Airways and Virgin to subsidise much-needed improvements at BAA's airports, particularly Heathrow.

'It is a simple issue,' says Hodgkinson. 'If we don't get higher charges from the airlines, we cannot raise the money and our airport facilities will become more and more crowded and eventually we will have to impose safety limits.'

Hodgkinson, 58, has worked in the transport business all his life. The former Essex schoolboy left Nottingham University with a degree in industrial economics and joined Ford. 'I was headhunted by Lord Stokes [then boss at

British Leyland] to price the products,' he recalls. 'One of the reasons that Land Rover and Jaguar are now successful is because we actually put the prices up.'

He joined BAA ten years ago as group airports director and took over from chief executive Sir John Egan in 1999. Charming and affable, he is said to be highly popular with BAA staff and claims to know the names of all 200 who work at its headquarters near London's Victoria Station.

He is also popular with most of the top executives in the aviation industry. He regularly enjoys a drink with BA boss Rod Eddington, though the campaign to persuade aviation regulators to agree to higher landing charges takes up most of Hodgkinson's time.

The knock-on effects of 11 September have also been time-consuming. BAA has spent £20m on extra security and £10 million on greater insurance. The result, says Hodgkinson, is that air travellers are better protected than ever.

He predicts that screening devices for explosives and weapons and even passport controls will become far more automated. 'Air travel will be safer, more secure and more rapid the more automated it becomes,' he says.

Hodgkinson retires in 18 months. During his time at BAA he has seen a huge increase in passenger numbers at British airports. And he has turned BAA into a highly efficient and profitable cash-generating machine that has survived the damage caused by the abolition of duty-free sales.

BAA reported £318m profits for the year to 31 March - down because of 11 September, but still a robust result at a time when the aviation industry was suffering badly.

But BAA's financial success has not been achieved without criticism. Many claim that airports have been turned into glorified shopping malls with captive travellers forced to shop or compete for scarce waiting area seats while BAA imposes extortionate charges on airlines.

Hodgkinson disagrees. 'Surveys show that 95% of our passengers like airport shopping,' he says. 'It would be wrong to say that we are perfect, but we think we have got the balance right.' Airport shopping is a 'massive lifestyle event', he adds.

While Hodgkinson agrees that it is difficult to achieve the right mix between passenger facilities and shops, he is envious of the space given to some overseas airports, particularly in Australia.

'Melbourne is a fantastic airport. It has to be one of the world's great airports. It has vast areas of space. It shows that with clear government direction, airport planners can go on and invest in great facilities.'

Hodgkinson has one challenge left before he can leave BAA in the safe hands of his deputy, Mike Clasper. He has to secure a pricing regime that can sustain a multi-billion pound investment programme.

'The aviation industry in Britain is working efficiently,' he says. 'My job is to make sure it continues to do so.'